By Donald V. Watkins
©Copyrighted and Published on April 25, 2018
For the fourth time in my career, I made a trip to a grand jury that looking into my professional conduct. I already knew that handpicked government witnesses had trashed my name and character in earlier sessions before this grand jury. I waived all of my constitutional rights and voluntarily entered the grand jury room to defend my name, character, and business dealings.
Unlike the government’s witnesses, I do not have different versions of the truth to manage. I only have one version of the truth and it is embodied in the business governance documents, purchase agreements, and promissory notes that define my relationship with all stakeholders in my companies.
You know the story: The U.S. Securities and Exchange Commission, which hates me because I beat the Commission in the 2005 high-profile criminal case involving Richard Scrushy, approached a handful of my business partners and suggested to them that they were “victims” of fraud. The SEC showed these so-called “victims” payments to various individuals that had been completely taken out of context. In doing so, the SEC ignored the plain language in the purchase agreements, business operating agreements, and promissory notes that authorized these payments. Their goal was to fabricate a fraud case against me.
Once the SEC had identified and selected the alleged “victims,” they pitched the case to the U.S. Attorney’s Office in Birmingham. Jay Town, the new Birmingham U.S. Attorney, wasted no time in convening a grand jury and designating me as a “target” of the investigation. A team of federal prosecutors, FBI agents, and IRS officials interviewed the alleged “victims,” handpicked the ones who best fit their scripted narrative, and streamed them in front of the grand jury. The narrative these witnesses followed in giving their testimony was one-sided and devoid of any consideration of the documents that define my rights, authority, and obligations as CEO of the companies in question.
For four hours in the grand jury room, I waited for prosecutors to identify a single business transaction that was not authorized in the business operating agreements that were written and approved eight years before I became the CEO of these companies. Prosecutors never identified one such transaction.
Instead, the prosecutors simply suggested in their line of questions that the alleged “victims” did not know how their money would be spent. I pointed out that the “victims” had Wall Street investment advisors with whom they consulted before making their purchase transactions.
Our financial records are permanently maintained and have always been available to the alleged “victims” and their financial advisors. Not one of these so-called “victims” has ever taken to time to review them at our corporate headquarters in Birmingham. All of them are still stakeholders in my businesses.
Next, prosecutor suggested that it was taking too long for the alleged “victims” to get a return on their investment. I reminded the grand jury that the purchase agreements in question stated in bold print that the “purchased economic interest involves a high degree of risk and is suitable only for persons who have no need for liquidity and can bear the loss of their entire investment.” Prosecutors did not respond to this statement because it does not support their false narrative.
For the record, it took me ten years to build a global waste-to-energy business that is a recognized industry leader. No competitor has accomplished this feat in a shorter period of time.
I also chronicled the increasing value of this business using documentation from third parties like the Federal Deposit Insurance Corporation, the National Football League, Citibank, JP Morgan, and Goldman Sachs. Contrary to what federal investigators suggested to the “victims,” no stakeholder in my business has lost any money.
One of the so-called “victims” owns a 20% economic interest in my 21.5% of an oil and gas exploration company. In October 2015, this company received a recoverable resource summary from one of the world’s leading geophysics firms that confirmed the presence of 522 million unrisked barrels of oil and 583 billion cubic feet of unrisked methane gas in our offshore oil block, based upon an interpretation of data gathered from our 2D seismic geotechnical work program. The company is now defining and scoping the 3D seismic work program that is required before test wells and commercial extraction can begin.
Oil traded at $67 per barrel while I was testifying yesterday. It takes about $15 per barrel to extract it. Yet, federal agents led this alleged “victim” to believe he had lost his money in this deal.
Finally, we spent a considerable amount of time in the grand jury on the interpretation of the purchase contracts. I have never seen the federal criminal justice system used as a forum for interpreting the key provisions of economic participation agreements, shareholder purchase contracts, and creditor rights statutes. This typically occurs in civil proceedings.
My takeaway from yesterday’s grand jury appearance was this: SEC lawyers and federal prosecutors have targeted me for modern-day form of COINTELPRO treatment. This case has nothing to do with “fraud.” It is a thinly veiled effort to damage my reputation and neutralize the effectiveness of my hard-hitting investigative journalism.
I do not know how much influence the prosecutors have over this grand jury, or what the grand jury will do in my case. At least the grand jury now knows my side of the story and they have seen the documents that should govern the outcome of the case.
Federal prosecutors in New Jersey probed the same allegations and reviewed the same evidence in a fair and professional manner. They ended their six-month probe in early 2016.
In contrast, the federal prosecutors in Birmingham are desperately looking for any justification to bring criminal charges against me, even if it means “twisting” evidence, misinterpreting the pertinent contracts, and ignoring the CEO's authority under the applicable provisions of governing documents. Their conduct is a definite throwback to the old COINTELPRO days.
We will see whether justice prevails in the Birmingham grand jury probe like it did in the New Jersey probe, or whether COINTELPRO will rise again in Alabama.
PHOTO: First Assistant United States Attorney Lloyd Peeples is leading the team of prosecutors and federal agents in this grand jury probe.
PHOTO: The newspaper articles below chronicle my first trip to the "Lion's Den" in 1976. High ranking Montgomery, Alabama police officers tried to frame me on bribery and witness intimidation charges after I exposed a police scandal involving the 1975 murder of Bernard Whitehurst by patrolman Donnie Foster. A Montgomery County grand jury refused to indictment me. The case evolved into a nationally recognized scandal that resulted in the resignations of Montgomery’s mayor and police commissioner, the indictment of three police officers, and the firing or resignation of eight others.